A proposal in the works at the Financial Accounting Standards Board could put a severe crimp in banks' use of repurchase agreements to raise money and manage interest rate risk, some bankers say.

The accounting board, as part of a major rewrite of its rules on transfers of financial assets, wants to classify all repurchase agreements of longer than three months as sales. At present, "repos" - in which one party sells securities to another and agrees to buy them back at a specified price after a specified time - are treated as collaterized loans.

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